Online ‘Payday’ Lenders Seek U.S. Oversight to Avoid State Rules

The Internet’s “don’t-call-us- payday” lenders are making a bid for more respect in Washingtonand less control from state regulators.

Firms offering short-term online loans, including Fort Worth, Texas-based Cash America International Inc. (CSH), are ramping up political contributions, hiring lobbyists and asking Congress to largely transfer oversight from states to the U.S. Office of the Comptroller of the Currency. A House committee today will hold a hearing on the proposal, which the OCC itself opposes.

As the $11 billion online loan industry bulks up in Washington, it also aims to shed the “payday lenders” label, according to talking points drafted by Peter Barden, a spokesman for the Online Lenders Alliance.

The memo advised lenders making lobbying visits to Capitol Hill this summer to “avoid using the term ’payday.’ Talk about short-term, small-dollar lending.”

Behind it all is more spending. The political action committee for Cash America is on pace to double its annual campaign contributions from the $200,000 it gave in 2007, according to federal election records, and the lender is bankrolling a new coalition to push for the legislation.

The core of the bill, sponsored by Representatives Blaine Luetkemeyer, a Missouri Republican, and Joe Baca, a California Democrat, would give the OCC authority to designate lenders as National Consumer Credit Corporations and require the regulator to treat storefront and online lenders equally.